Tuesday, November 26, 2013

Today’s New Residential Construction Report while including only limited data as a result of the recent government shutdown, showed notable improvement in permit activity in October increasing 6.2% from September.

Single family housing permits, the most leading of indicators, increased 0.8% from September to 620K single family units (SAAR), and increased 8.8% above the level seen in October 2012 but still remained well below levels seen at the peak in September 2005.

Meanwhile, the NARs chief economist Lawrence Yun suggested that the recent government shutdown impacted pending sales as a result of IRS delays in borrower income verification:

"The government shutdown in the first half of last month sidelined some potential buyers. In a survey, 17 percent of Realtors reported delays in October, mostly from waiting for IRS income verification for mortgage approval, ... We could rebound a bit from this level, but still face the headwinds of limited inventory and falling affordability conditions. Job creation and a slight dialing down from current stringent mortgage underwriting standards going into 2014 can help offset the headwind factors,"

The following chart shows the seasonally adjusted national pending home sales index along with the percent change on a year-over-year basis as well as the percent change from the peak set in 2005 (click for larger version).

Thursday, November 21, 2013

Today’s jobless claims report showed a decline for initial unemployment claims and an increase to continued unemployment claims as seasonally adjusted initial claims continued to trend well below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims declined by a notable 21,000 to 323,000 claims from 344,000 claims for the prior week while seasonally adjusted “continued” claims increased by 66,000 claims to 2.876 million resulting in an “insured” unemployment rate of 2.2%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.30 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.50 million people that are currently counted as receiving traditional continued unemployment benefits, there are 3.80 million people on state and federal unemployment rolls.

Single family home sales also declined falling 4.1% from September but rising 5.2% above the level seen in October 2012 while the median selling price increased a notable 12.7% above the level seen a year earlier.

Inventory of single family homes declined from September to 1.88 million units but climbed 1.1% above the level seen in October 2012 which, along with the sales pace, resulted in a monthly supply of 5.0 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) went flat at 4.3% since last week while the purchase application volume increased 6% and the refinance application volume declined 7% over the same period.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

It's important to note that while the last few months results have suggested a pullback of sorts for home builder activity, the latest trend has been very strong and consistent with the overall recovery seen in the nation's housing markets.

Looking at the data, it is fairly clear that the last year of results indicate a major change in builder sentiment likely coming as a result of improvements in confidence given the notable rise in buyer traffic, reduced inventory and a more balanced monthly supply.

The latest employment situation report showed that conditions for the long term unemployed improved in October while still remaining distressed by historic standards.

Workers unemployed 27 weeks or more declined to 4.063 million or 36.1% of all unemployed workers while the median term of unemployment declined went flat at 16.3 weeks and the average stay on unemployment declined to 36.1 weeks.

Looking at the charts below (click for super interactive versions) you can see that today’s sorry situation far exceeds even the conditions seen during the double-dip recessionary period of the early 1980s, long considered by economists to be the worst period of unemployment since the Great Depression.

The latest Employment Situation report showed that in October “total unemployment” including all marginally attached workers increased to 13.8% while the traditionally reported unemployment rate inched up to 7.3%.

The traditional unemployment rate is calculated from the monthly household survey results using a fairly explicit definition of “unemployed” (essentially unemployed and currently looking for full time employment) leaving many workers to be considered effectively “on the margin” either employed in part time work when full time is preferred or simply unemployed and no longer looking for work.

The Bureau of Labor Statistics considers “marginally attached” workers (including discouraged workers) and persons who have settled for part time employment to be “underutilized” labor.

The broadest view of unemployment would include both traditionally unemployed workers and all other underutilized workers.

To calculate the “total” rate of unemployment we would simply use this larger group rather than the smaller and more restrictive “unemployed” group used in the traditional unemployment rate calculation.

Thursday, November 07, 2013

Today’s jobless claims report showed a decline for initial unemployment claims and a slight increase to continued unemployment claims as seasonally adjusted initial claims continued to trend below the closely watched 400K level.

Seasonally adjusted “initial” unemployment claims declined by 9,000 to 336,000 claims from 345,000 claims for the prior week while seasonally adjusted “continued” claims declined by 8,000 claims to 2.868 million resulting in an “insured” unemployment rate of 2.2%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 1.37 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 2.50 million people that are currently counted as receiving traditional continued unemployment benefits, there are 3.88 million people on state and federal unemployment rolls.